At 2019 LR Construction has a face debt value of 20.59M trading at 87% with a...
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At 2019 LR Construction has a face debt value of 20.59M trading at 87% with a pre-tax weigthed cost of 6.22%. LR common equity for the year was valued at 118.46M and preferred equity for 11.04M. The Preferred equity rate was calculated to be 8.86%. However, the common equity was to be calculated using CAPM approach, with a 3% risk free rate and a 7% market risk premium rate, assuming a 1.37 Beta. If the tax rate is 39%, What is this firm's WACC? At 2019 LR Construction has a face debt value of 20.59M trading at 87% with a pre-tax weigthed cost of 6.22%. LR common equity for the year was valued at 118.46M and preferred equity for 11.04M. The Preferred equity rate was calculated to be 8.86%. However, the common equity was to be calculated using CAPM approach, with a 3% risk free rate and a 7% market risk premium rate, assuming a 1.37 Beta. If the tax rate is 39%, What is this firm's WACC?
Expert Answer:
Answer rating: 100% (QA)
Step 1 The firms WACC is calculated as follows Cost of equity Risk Free Rate Beta Market Ri... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-1292162409
18th edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
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